STOCKS
Equity indices seem to need some fresh trigger to move up from current levels. Dow is struggling to breach 27000 and could remain in a range of 26000-27000 for some time. DAX, Sensex and Nifty can consolidate in a narrow range before moving further higher from current levels. Shanghai can remain in a broad sideways range. Nikkei is closed today.
The Dow (26652.33, −353.51, -1.31%) is struggling to breach 27000. As such the rise to 28000 that we had mentioned yesterday might get delayed. As we had mentioned earlier, a range of 26000-27000 can be seen for sometime. In case of a strong fall below 26000, the expected corrective fall can happen from here itself without seeing a rise to 28000. We will have to wait and watch.
The DAX (13103.39, −0.86, 0.007%) hovers around 13200. Our broader view of seeing a rise to 13350-13400 remains intact. 13000 and 12800 are good supports that can limit the downside. Also from a bigger picture, DAX has the potential to target 13800 on the upside over the medium term.
Nikkei (22751.61) is closed today on account of a public holiday.
Shanghai (3285.98, −39.13, -1.18%) trades lower and is likely to test 3200 on the downside as mentioned yesterday. Our view of seeing a broad range of 3200-3450 for a few weeks remains intact.
Nifty (11215.45, +82.85, +0.74%) remained in the range of 11000-11250 as expected. %) This narrow sideways range can continue for a few more sessions. Within this range our bias is bullish to see an upside break above 11250 and a rise to 11400-11600.
Sensex (38140.47, +268.95, +0.71%) oscillates around 38000 and will need a strong close above 38200 (revised higher from 38100 mentioned yesterday) in order to gain momentum and move up to 39000 and further higher level
COMMODITIES
Continued Dollar weakness keep the commodities strong just now. Crude prices could continue to rise along with stronger Gold and Silver. Copper may remain ranged below 3 for sometime before a rise is possible in the longer run.
Brent (43.50) and WTI (41.23) have risen well. WTI has broken above interim resistance near 41 while we expect Brent also to break above 45 soon. An initial dip from 45 could be expected in Brent which may hold for sometime but overall crude prices look bullish. For the next few sessions we may see a rise in Brent and WTI towards 45 and 43 respectively.
Gold (1884.30) and Silver (22.82) continue their rally towards 1890-1900 and 23-24 respectively and could soon meet the respective targets while Dollar remains weak and heads further down towards 94. (Refer Forex section below for view on Dollar Index)
Copper (2.9085) is stable near levels seen yesterday and could remain below 3 for some more sessions. Downside could be limited to 2.85/80 just now before a bounce back towards 3 or higher is seen again.
FOREX
Dollar Index remains weak while Euro has surged to levels past 1.16. This if continues could take the Euro towards 1.18 in the near term. Pound and Yuan look bullish for the near term while EURJPY and Aussie could see some corrective dip before continuing the upward rally. USDINR may test 74.90-75 before coming off from there.
Dollar Index (94.62) has broken below the Mar’20 low of 94.65 and if that sustains, we may expect a fall towards 93.90 in the near term.
Euro (1.1612) has broken above 1.16 as Dollar Index continues to fall. If Euro sustains above 1.16, we may expect a further rise to 1.1750-1.1800 soon before a sharp correction sets in.
EURJPY (123.71) may dip towards 123 in the near term before a rise back towards 124+ is seen. Near term could see a corrective dip from current levels.
Dollar-Yen (106.50) tested 107.55 but could not sustain higher and instead fell back to levels below 107. Overall 108-106 region is likely to hold for the next 1-2 weeks.
Aussie (0.7110) could remain stable or see a dip while below 0.72 before again rising back towards 0.74 in the longer run. The movement could be in line with the movement in Copper (Refer to commodities above). A break above 3 in Copper could lead to a break above 0.72 on Aussie.
Pound (1.2753) is moving up and could be headed towards 1.28 in the near term.
USDCNY (7.0092) continues to be ranged within 7.03-6.9 region and is expected to remain so for the near term.
USDINR (74.7650) made an intra-day high of 74.87 yesterday before closing lower. We continue to see a test of 74.90-75.00 first before a fall back to 74.50 or lower comes in.
INTEREST RATES
The US Treasury yields have dipped and are poised at their crucial supports. Inability to bounce from here will negate our view of seeing a fresh rally from here. In turn it will be bearish to see more fall. The German Yields remain lower and keep our bearish view intact to see further fall. The 10Yr GoI is mixed and can remain in a sideways range.
The US 2Yr (0.15%) and the 5Yr (0.27%) Treasury yields remain stable while the 10Yr (0.58%) has dipped 2 bps and 30Yr (1.23%) a little sharper by 6bps. The 10Yr is at its crucial support while the 30Yr has dipped just below the key level of 1.25%. Inability to bounce from here will drag the yields lower to 0.40% (10Yr) and 1.15%-1.10% (30Yr). It will also negate our view of seeing a fresh leg of rise from here that we had been mentioning for some time. We will have to wait and watch.
The German 2Yr (-0.69%), 5Yr (-0.68%), 10Yr (-0.48%) and the 30Yr (-0.06%) yields have inched higher by 1 bps each across tenors. Our view remains bearish. We expect the 10Yr to fall to -0.60% and the 30Yr to test -0.20% on the downside in the coming weeks from current levels.
The 10Yr GoI (5.8049%) retains our narrow 5.80%-5.85% range and has dipped within it yesterday. It will have to be seen if it sustains above 5.80% or now. A break below 5.80% will bring back the chances of seeing 5.78%-5.75% into the picture again. In that case a wider range of 5.75%-5.85% can be seen.
